FACT: Solar Costs Are Dropping Rapidly

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Solar Panel Prices Have Fallen Dramatically Over The Last Few Decades. The following chart generated by the nonpartisan Energy Information Administration shows that the price of both solar cells and solar panels, or “modules” (an array of solar photovoltaic cells), fell significantly from 1989 to 2010:

Source: EIA

[Energy Information Administration, 9/27/12]

The trend is even more dramatic when reductions from the 1970′s to present are included, as can be seen in this chart of solar cell prices from The Economist based on data from Bloomberg New Energy Finance:

Source: The Economist from BNEF data

[The Economist, 12/28/12]

Bloomberg New Energy Finance: “Further Price Reductions Are Likely To Occur In Coming Years.” A research paper by Bloomberg New Energy Finance found that manufacturers were able to reduce the price-per-watt of solar energy by 50 percent from 2008 to 2009 due to cost reductions from “scale and advances in wafer, cell and module manufacturing processes, as well as to improved performance resulting from better cell efficiencies and lower electrical conversion losses.” The report further found that “technological advancements, process improvements, and changes in the structure of the industry suggest that further price reductions are likely to occur in coming years.” [Bloomberg New Energy Finance, 3/16/12 (pdf), via Forbes]

Solar Is On Track To Be As Cheap As Our Current Electricity By 2020. Computer scientist Ramez Naam created the following graph on plummeting solar prices based on a report by the Department of Energy’s National Renewable Energy Laboratory:

Source: Ramez Naam in The Scientific American

Naam found that if solar prices continue to decline at that rate, solar will be as cheap as our current electricity by 2020:

Source: Ramez Naam in The Scientific American

Naam further found that the cost of solar photovoltaics has been declining at a logarithmic scale. Similarly to “Moore’s law,” a specific learning curve for computer hardware documenting the steady and rapid decline in costs, solar has its own fairly predictable learning curve leading to cost reductions. The National Renewable Energy Laboratory states that “For many years, the price of modules has followed a well-documented learning curve of a 20 percent reduction for every doubling of global module shipments” based partly on “shared knowledge and experience.” [Scientific American, 3/16/11] [National Renewable Energy Laboratory, February 2012]

DOE Lab: Price Of Solar Installations Has “Fallen Precipitously” And Can Continue To Fall. A report by the Department of Energy’s Lawrence Berkeley National Laboratory found that “Since 2009, installed prices have fallen precipitously” and that initial data for the first half of 2012 indicated that these prices would “continue to decline.” The report further stated “Notwithstanding the significant installed price reductions that have already occurred in the United States, international experience suggests that greater near-term reductions may be possible.” The report noted that several countries have lower installed solar prices than the U.S. and that reductions in installed solar prices in the U.S. have come largely from the decline in solar panel prices, while “soft costs,” the costs of installing solar beyond the hardware, have remained relatively high. In Germany, for instance, the soft costs of solar are lower in part because solar installations are effectively exempt from sales taxes, permitting requirements are more streamlined, and the market benefits from greater economies of scale. [Lawrence Berkeley National Laboratory, "Tracking The Sun V," November 2012] [Lawrence Berkeley National Laboratory, "Why Are Residential PV Prices In Germany So Much Lower Than In The United States?", September 2012]

IEA: Solar Electricity “Is Already Competitive In Some Markets, And Will Be Soon In Much Larger Ones.” The International Energy Agency explained that globally solar energy is “already competitive in some markets” and that they are not simply “niche markets” but multi-billion dollar markets: